Energy Capital: Report from Japan

Matthew Rhodes, Chair of Energy Capital, supported by Dr Simon Slater, Director of Policy and Partnership for Sustainability West Midlands and the West Midlands Combined Authority’s representative on the Energy Capital Board, have recently returned from a visit to Japan, which focussed on future energy systems, as part of the UK’s Industrial Strategy Delegation.

They took the opportunity to promote energy investment opportunities within the West Midlands and to build relations with Japanese companies, researchers and other local organisations.

Here is some interesting background information about our new Japanese friends, along with reasons why we expect our planned collaborations to prove fruitful.

An overview of the Japanese energy industry

Japan is one of the top five energy consumers in the world. Their post-war economic ‘miracle’ led to a huge increase in energy consumption, but with few natural resources the country had to meet demand through a mixture of fossil fuel imports and a thriving nuclear industry that, at one stage, supplied more than a quarter of total energy requirements. However, the 2011 earthquake and resulting tsunami, which caused an accident at the Fukushima nuclear reactor, took away the public’s appetite for the nuclear option, leading to an even greater reliance on imports. This resulted in a worsening trade deficit, higher government debt, revenue losses for electricity companies, and higher energy prices for consumers.

The country is still the world’s largest importer of natural gas, and third biggest importer of both coal and oil, but there is an obvious case and clear desire to develop its renewable and smart energy capabilities. Indeed, the government has sought to encourage investment in these sectors by liberalising the energy market through the use of feed in tariffs.

And Japan is certainly not backward when it comes to a variety of energy efficient technologies. It has long been a driver of clean coal, has a viable market in domestic fuel cells, is the world’s fourth biggest user of solar technology, and has also developed geothermal, hydro, and wind capabilities. However, due to frequent earthquake activity and rolling plans of economic development, there has been little desire to address energy efficiency from the demand side, through large scale housing retrofits.

An attractive partner

The Japanese are famed for their meticulous forward planning and technological innovation, but the downside of this has been a sometimes slow response to emerging opportunities. This has made them extremely keen to forge relationships with researchers and developers around the globe.

Japan’s own attraction as a partner is clear. Aside from its technological prowess and well-developed economy, it is recognised as a gateway to South-East Asia, which includes the world’s new economic powerhouse, China.

Similarities with the West Midlands

Kyushu, the most south-westerly of Japan’s main islands, featured prominently in the delegation’s visit, and the island has a lot in common with the West Midlands. Both were the birthplaces of their respective countries’ industrial revolutions; each has a proud manufacturing base, where the automotive industry features heavily; and both are rich in energy research and innovation facilities.

Simon Slater noted something else that will soon unite the two areas: ‘I was inspired by the energy cluster example in Kyushu. We have all the same ingredients in the West Midlands; we just need the same strong local and regional government leadership and policy to help accelerate the coordination and action begun by Energy Capital. Hopefully, the new Mayor and the emerging team at the West Midlands Combined Authority will begin to provide this leadership in 2017.’

Watch this space

Energy Capital has indeed begun something special, both in the West Midlands and much further afield. We are already leading the way in forging ever closer ties with likeminded areas around the globe, who also recognise the need to quickly adapt to the world’s rapidly changing energy systems.